Wheat Futures Surge on Ideas Prices Will Get no Lower

Wheat futures prices rose Thursday on the Chicago Board of Trade as big buyers started snapping up grain, believing prices have bottomed out.

On other markets, corn and cotton slumped, and frozen pork bellies continued to retreat from five-year highs. The Commodity Research Bureau’s index of 17 commodities inched 0.52 point lower to 249.91.

Although prices are at historic highs, a bushel of wheat costs about $1.50 less than it did a month ago. Mills are buying because they believe prices will get no lower now that harvesting has begun, said Marty Colgan, an account executive with LFG, a Chicago commodity broker.

``I haven’t seen an official players sheet, but I know mills are buying this stuff,″ he said. ``They see prices ... cheaper than it’s been in a month.″

Rumors that China and Egypt want to buy 500,000 tons of wheat also sent prices higher, said analyst Jack Scoville with the Linn Group.

Corn edged lower on good growing weather in Iowa, Nebraska, Minnesota and Missouri. The western Corn Belt has most of its corn planted, has been bathed with just enough rain, and is expected to receive 80-degree temperatures that should help crop growth, Colgan said.

``The corn plants are just going to make a lot of progress,″ he said.

The crop should be further helped because, traders believe, a forecast expected Friday will show normal conditions through mid-July. Good weather throughout the Midwest also should allow farmers to plant their remaining seeds near the ideal deadline of Saturday.

A good yield is vital because the United States likely will have 15 days of reserves _ instead of the standard 90 _ when new corn begins arriving at elevators in September.

The low stockpiles and commercial buying, however, kept corn for July from falling far, Scoville said.

``Chicago Board of Trade corn is the cheapest east of the Mississippi,″ he said. ``If you want corn, we’ve got it for you.″

Frozen pork bellies saw a fifth day of decreases as they retreated from five-year highs on the Chicago Mercantile Exchange. The fall stems from reduced buying from fast-food chains that have enough stockpiles to make bacon through the first part of the summer, Colgan said.

Demand increased earlier this year partly because restaurants need an increasing amount of bacon to enhance the flavor of hamburgers, which are being cooked longer to kill deadly e-coli bacteria, he said.

``All of a sudden, fast food restaurants feel comfortable with their inventories and their summer needs ... and they’re not there to support prices,″ Colgan said.

Cotton for July delivery neared lows of last summer on ideas prices finally are in line with South American and Asian crops, said Bryan Varner, who owner Varner Bros. trading company in Cleveland, Miss.

Prices were further pressured on talk Argentina would make a shipment. Ideas that Arizona farmers soon would supply another 10,000 bales _ a relatively small amount _ were enough to make a saturated market nervous, he said.

``The market is psychologically geared to any additional cotton being negative,″ he said.

Over the past 10 months, July cotton has ranged from 92.60 cents a pound to 73.90 cents a pound. Thursday, it fell 2.89 cents to 77.07 cents a pound.